Innovation Funding for Growth-Oriented Companies in Edmonton
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The Canadian Government provides over $7B in innovation funding each year and is considered one of the most generous countries for funding research, innovation, and experimentation. We share information about three of Canada's innovation funding programs during this exclusive Lunch & Learn at TEC Edmonton on February 3, 2015. These slides cover the following topics: -Scientific Research & Experimental Development Tax Credit (SR&ED) presented by Jeff Christie, Boast Capital -Mitacs research internships -NRC IRAP
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Innovation Funding for Growth-Oriented Companies in Edmonton
- 2. SR&Education: Everything You Need To Know to Claim SR&ED Tax Credits February 3, 2015 Presented by Jeff Christie
- 4. | 4 SR&ED FUNDING In 2013, the CRA provided $3.4B of investment tax credits (ITCs) to 22,000 companies
- 6. | 5 SR&ED ELIGIBILITY 1. Was there a scientific or a technological uncertainty that could not be removed by standard practice/engineering? 1. Did the effort involve formulating a hypothesis specifically aimed at reducing or eliminating the uncertainty?
- 7. | 5 SR&ED ELIGIBILITY 3. Was the adopted procedure consistent with the total discipline of the scientific method, including formulating, testing, and modifying the hypothesis? 3. Did the process result in a scientific or technological advancement? 3. Was a record of the hypothesis tested and results kept as the work progressed?
- 8. | 6 EXAMPLES
- 9. | 7 WHO CAN CLAIM? CCPC = Canadian Controlled Private Corporations Non-CCPC = Foreign or Publically Owned Corporations Partnerships
- 10. | 8 WHAT CAN YOU CLAIM Non-arms length subcontractors *Salaries and sub-contractors MUST be Canadian tax payers
- 11. | 9 CCPC AND SME SME = Small to medium sized enterprise generating less than $500K in taxable net income in the prior fiscal year ITCs are refundable ($$$) * Salaries and sub-contractors MUST be Canadian tax payers
- 12. | 10 ITCs are non-refundable ITCs can be carried back 3 years or forward indefinitely NON-CCPC or LARGE CCPC * Salaries and sub-contractors MUST be Canadian tax payers
- 13. | 11 OVERHEAD
- 14. | 16 DOCUMENTATION - TECH Documented at the time the work was completed Technical obstacles or challenges Dated
- 15. | 17 DOCUMENTATION - TIME
- 16. | 17 DOCUMENTATION - $$$
- 17. | 18 HOW TO FILE Claim is submitted with your corporate tax return – One set of tax schedules for Federal – Another set of tax schedules for Provincial
- 18. | 14 WHEN TO CLAIM? 18 Months Past Fiscal Year End Current Claim = Within 6 mo Amended Claim = Within 7 to 18 mo
- 19. | 18 CRA REVIEWS CRA Review ≠ Tax Audit Multiple types of CRA Reviews: First Time Claimant Advisory Service (FTCAS) Desktop Financial Technical & Financial
- 20. | 19 THE DO’S AND DON’TS Do’s for Companies: Pay yourself and staff Start time tracking and proper documentation now Incorporate your company and ensure clear IP ownership
- 21. | 20 THE DO’S AND DON’TS Don’ts for Companies: Underestimate the importance of documentation Focus on the business opportunity Leave your SR&ED claim until the last minute
- 22. | 21 HOW WE WORK Contingent Scope your claim upfront and invoice when your claim is successful Efficient Only require interviews & documentation Proactive Ongoing engagement and future recommendations
- 23. | 22 WHY WORK WITH US Highly reputable Technology- focused Efficient Well-connected
- 24. | 23 JEFF CHRISTIE PARTNER 403 589 2809 | jchristie@boastcapital.com BoastCapital.com | @BoastCapital | @ChristieLuge For more info on R&D tax credits and other innovation funding programs, subscribe to our newsletter.
- 25. www.mitacs.ca 25www.mitacs.ca Delivering innovation through research and development Eric Loo, PhD Business Development Specialist February 3, 2015 Boast Capital Innovation Funding Lunch and Learn
- 26. www.mitacs.ca 26 Agenda Why Mitacs? Talent supply chain Research outcomes Mitacs programs Contact information
- 27. www.mitacs.ca 27 Why Mitacs? National research network 15 years in operation 37 research partners 61 university partners Almost 10,000 research projects to solve business problems and drive innovation
- 28. www.mitacs.ca 28 Annual snapshot Why Mitacs?
- 29. www.mitacs.ca 29 The Mitacs network Why Mitacs? Small & medium business Large business Start ups Multi-nationals Not-for-profits* Computer science Engineering Anthropology Economics Chemistry Geography Health sciences Genetics Social work Forestry History Languages & linguistics Mathematics Business Education Interactive arts Psychology And more…
- 30. www.mitacs.ca 30 Research talent supply chain Why Mitacs? Attract Train Retain Deploy Best and brightest research talent With industry- ready skills and experience Talent locally to enhance Canadian industry Researchers to drive innovation outcomes
- 31. www.mitacs.ca 31 National news coverage Why Mitacs?
- 32. www.mitacs.ca 32 Program growth Why Mitacs? 0 500 1000 1500 2000 2500 18 30 85 170 240 675 1060 1544 1576 2109 Mitacs research projects
- 33. www.mitacs.ca 33 Business Advantages Why Mitacs? Access expertise not currently in- house Leverage R&D budget and claim SR&ED tax credits Gain a competitive advantage Tap into a national research network Develop IP Researchers paid by Mitacs: not a company employee Pipeline for recruitment of talent Mitacs assistance throughout application process Industry Industry International Academic
- 34. www.mitacs.ca 34 Research Outcomes Pulp mill saves $40,000/year Robotics company enhances drone aircraft camera prototype Biotech firm commercializes one-step food testing kits New generation greenhouse lighting results in higher crop yields Enhanced GPS navigation technology commercialized Improved chat room filter to improve internet security Why Mitacs?
- 35. www.mitacs.ca 35 Building research collaborations Large-scale, multidisciplinary projects From $15,000 to $2M+ Development of IP Top research talent Matching funding Scalable projects Quick application – 6 week approval
- 36. www.mitacs.ca 36 Standard build Mitacs Accelerate $10,000 minimum intern stipend $5,000 other project-related expenses $7,500 Mitacs $7,500 Industry $15,000 Over 4-6 months • Grad student (MSc or PhD) and Postdocs • Clearly defined project objectives • 50/50 time commitment at both the industry and academic sites • Ensure active collaboration • Multiple Internships – 2 max per Masters Student – 6 max per PhD Student – 6 max per Post-Doc
- 37. www.mitacs.ca 37 Scalability: build large-scale projects, “clusters” First 1 to 5 internship units: industry funding matched 1:1 Mitacs Accelerate 6 internships $80,000 (cluster) $44,000 from Mitacs, $36,000 from partner. Minimum 3 interns. Access researchers from multiple disciplines for the same research project 4 months 4 months 4months 4 months 4 months 4 months
- 38. www.mitacs.ca 38 Cluster build Mitacs Accelerate • Extra leverage for medium to large projects • Higher ratio of funds matching • Minimum 3 students • Can be split among different research groups • Scalable: each additional $18K from industry generates $22K from Mitacs $80,000 $36, 000 Industry $44,000 Mitacs $10,000 Stipend $20,000 other project-related expenses $10,000 Stipend $10,000 Stipend $10,000 Stipend $10,000 Stipend $10,000 Stipend
- 39. www.mitacs.ca 39 Three-year PhD Fellowships Long-term research collaboration $90,000 in total funding $25,000 stipend + $5,000 research costs annually Peer-reviewed, open to all disciplines and international students Professor may recruit PhD after project approval Next call opens Early 2015 Annual: $12,000 from partner, $18,000 from Mitacs = $30,000 total grant.
- 40. www.mitacs.ca 40 Partners Business with facilities in Canada Domestic or foreign-owned May include – Utility providers – University spin-offs – First Nations development corporations – Industry associations NGOs, not-for-profit, foundations, industry based research collaborations Mitacs Accelerate
- 41. www.mitacs.ca 41 Two-year projects Postdoctoral expertise Leveraged funding Relationships with experts Evaluation of potential employees Access to specialized software and equipment Develop in-house R&D capacity Next call End of March
- 42. www.mitacs.ca 42 $50,000 $7,500 $57,500 Mitacs Elevate Annual Funding cycle Mitacs Elevate
- 43. www.mitacs.ca 43 Our Funding Partners
- 44. www.mitacs.ca 44 Next Steps Contact me to discuss research goals: Find a local representative: mitacs.ca/accelerate/contact-us Eric Loo Business Development Specialist Mobile: 587-335-3778 Email: eloo@mitacs.ca
- 45. Feb 3, 2015
- 46. Page X • Customized guidance from expert advisors • Information on funding and support programs • Quick assistance and referrals Concierge Service – Your Guide to Innovation
- 47. Page 4 Innovative SMEs Concierge Service Federal Innovation Programs/ Services Provincial Innovation Programs/ Services Regional Innovation Programs/ Services Local Innovation Support Canada Business Network Concierge Service Partnership Model Website Concierge Advisors Client Contact Centre
- 48. Page 7 Timeline: Evolution of the Concierge Service 1. Government Programs 2. Expert Information 3. Equipment and Facilities 4. Global Opportunities • Expanded services progressively phased-in
- 49. •Call our bilingual client contact center 1-855-53-GUIDE (1-855-534-8433) Hours of operations: 7:30 AM to 7:30 PM EST Monday to Friday •Visit our website Our online database provides initial information on some of the programs and services that are available: www.concierge.portal.gc.ca Page 9 How to reach the Concierge Service
- 50. NRC-IRAP • Advisory Services & Funding Through an Industry Technology Advisor (ITA) • IRAP = Industrial Research Assistance Program • BIAP = Business Innovation Access Program • YEP = Youth Employment Program • CMC Canada joint program • SME Canada joint program • CTO = Contribution to Organizations
- 51. NRC-IRAP • IRAP typically funds 80% of R&D personnel costs for a project to a max of 50% of total project costs • Small projects typically an Abbreviated Review Project (up to $50k) requiring about a month • Larger projects (> $100k contribution) have a more involved due diligence process requiring 1-3 months to complete
- 52. NRC-BIAP • Funding up to $50k over a 3-6 month period for work done at public R&D institution (e.g. NAIT, UofAB, Red Deer College, NINT, etc.) • Covers 75% of total project costs • Work is often access to specialized knowledge and equipment not available to the SME
- 53. NRC-YEP • Youth Employment Program provides a non- repayable grant for a new technical hire (recent grad) • Grant (approx. $18k) paid monthly over 6 months • Application through ITA with turnaround of 10 working days
- 54. IRAP-CMC Canada • Provides up to $5k for a CMC certified consultant to undertake a strategic project with SME • Example projects: ERP system, manufacturing process change implementation, market expansion, etc. • Nominal registration fee of $150 for the SME
- 55. IRAP-SME Canada • Subsidized access to a bench-marking service • Value of approx. $1250 with nominal registration fee of $150 for SME • Allows SME to compare its productivity (various measures) with comparators throughout N. America over time
- 56. IRAP CTOs • Contribution to Non-Profit NGOs where alignment of objectives is achieved • Typical grants are to industry associations, incubators/accelerators, economic development agencies • Local Examples: TEC Edmonton, Leduc-Nisku, Regional Business Accelerator- Lloydminster, Wood Buffalo RBA, BioAlberta, etc.
Notes de l'éditeur
- Welcome, introductions, format of presentation (length, will be sharing notes after and posting on Slideshare)
- Welcome, introductions, format of presentation (length, will be sharing notes after and posting on Slideshare)
- About SR&ED Program: Federal and Provincial tax incentive program that allows companies to recover cost associated with R&D Program is intended to encourage businesses of all sizes to conduct applied research and development (R&D) that will lead to new, improved, or technologically advanced products, processes, principles, methodologies, or materials Can recover a significant credit that can be re-invested into your growing business More Specifically: SR&ED (commonly pronounced SHRED) stands for Scientific Research and Experimental Development Scientific Research (SR) is usually carried out in Universities/Laboratories Experimental Development (ED) is considered a majority of the claims (95%) CRA defines this as “Work performed for the purpose of creating new, or improving existing, materials, devices, products, or processes” Can occur in various industries (both low and high tech)
- SR&ED is a tax credit. The benefits are called investment tax credits or ITCs. In 2013, CRA provided about $3.4B in assistance to 22,000 claimants. (In 2012, they provided over $3.6B 22,000.)
- Three criteria to qualify for SR&ED: 1. Technology Advancement Sought – explain with a relevant example 2. Technological Uncertainties, Obstacles, or Challenges – explain with relevant example 3. Technical Content (Iterations) – explain with relevant example
- http://www.cra-arc.gc.ca/txcrdt/sred-rsde/clmng/lgbltywrkfrsrdnvstmnttxcrdts-eng.html#N1038D
- http://www.cra-arc.gc.ca/txcrdt/sred-rsde/clmng/lgbltywrkfrsrdnvstmnttxcrdts-eng.html#N1038D
- Other examples in ICT include: (*Switch these examples and images so it is targeted for the audience) Combining existing technology or software that was not intended to work together Developing new software Improving software to work with legacy systems Developing new down hole tools or fluids Adapting a product for use it was not intended to be used for
- *Explain CCPC and non-CCPC and provide company examples that people would be familiar with. We are going to focus on Corporations for this discussion. If you have a proprietorship or partnership, let’s discuss one on one after the presentation.
- SME = Small to medium sized enterprise generating less than $500K of revenue per fiscal year For 2014: Salaries ~64% (Work must be carried out in Canada. Only 10% or work can be performed outside of Canada) Sub-Contactors ~ 32% (Calculated on 80% of expenditures) Materials ~40% ICTs are refundable for Canadian controlled SMEs. This means that you can receive a cheque, assuming you’ve paid all your income tax owing. Note: Capital expenditures ends after 2013.
- Foreign owned corporations, publically-traded, or Canadian controlled companies that are earning more than $500K in revenue per year qualify for the following returns: For 2014: Salaries ~36% Sub-Contactors ~ 18% (Calculated on 80% of expenditures) Materials ~28% Lowered the federal SR&ED return rate from 20% to 15% as of Jan 1, 2014 ITCs are non-refundable. They are simply tax credits that be carried back 3 years or forward indefinitely.
- What about overhead? Proxy vs Traditional Method In 2014, it is 55%. For 2013 claims, it is 65%
- So you think you might qualify? Here’s what you need to be doing right now. Technical documentation needs to be: Contemporaneous – documented at the time of the experimentation. Highlight technical obstacles or challenges Dated Examples of documentation: Timesheets, Engineering notebooks, Versioning Control on software Iterations, Whiteboard images, Emails. Just be aware. Some agile software development teams have needed to implement a better documentation system for their SR&ED eligible projects. Each company works very differently - we can help you set up an efficient system for your company.
- Time Tracking
- Financial Tracking - What needs to be tracked from a financial/accounting perspective and give some tips on how to do that
- 18 Months past the fiscal year end Current Filing= 6 Months to file taxes after fiscal year end Amended Filing= 7 Months to 18 month past fiscal year end
- A CRA Audit is not to be confused with a tax audit. The CRA only reviews SR&ED expenditures and technical work. Multiple Types of Reviews: Desktop Financial only Technical & Financial FTCAS – new service launched Jan 2014, it is an in-person meeting with the CRA to review your first submitted claim and to set you up for success for the next claim. Will happen every 4/5 years Most important way to support a review claim is documentation and time tracking. Keep in mind, just because your claim has been approved, doesn’t mean that it’s been fully reviewed. Just because you are at a higher risk of an audit, doesn’t mean you shouldn’t submit a claim. If you have documentation to support your claim, you should be fine and we are with you every step of the way.
- Recommended approaches for claiming R&D grants: Pay yourself or staff (sweat equity is $0 equity) SR&ED require spend / NRC – solid business model Incorporate company and ensure clear IP ownership. Company vs contractor
- Common pitfalls for technology startups: Poor documentation of dev activity and financials- also important for business. Focus on business opportunity vs technology
- Contingent Scope your claim upfront and invoice when your claim is successful Efficient Only require interviews & documentation Proactive Ongoing engagement and future recommendations
- Highly Reputable – we have a long-standing positive reputation with the Canada Revenue Agency Technology Focused – we hire technically trained and highly knowledgeable Technology Advisors Efficient - our inhouse team uses a 7-step methodology to process claims. Well Connected – we’ve built strong relationships with innovation funding program administrators, investors, and support organizations in multiple communities
- If you haven’t already, assess your internal projects for SR&ED eligibility. You may have some projects that you hadn’t even considered. I’d happy to sit down with you for 30 minutes to assess your potential. We work on a contingency basis, so we don’t invoice until you’ve successfully received your ITC’s. We invoice on a percentage of the ITCs collected. I’ll be emailing you with a copy of our SR&ED infographic as well as a link to the Slideshare file with these slides. Now let’s move onto Questions. Will publish on SlideShare and distribute the link afterwards
- Icons represent the Mitacs offices across Canada Mitacs is celebrating its 15th year of inspiring innovation in Canada Almost 10,000 research projects across all Mitacs programs (Accelerate, Globalink, Elevate and Enterprise) over 15 years. We have 61 academic partners across Canada Our research collaborations help companies overcome R&D challenges and drive innovation Why is Mitacs different? Can be scaled to suit the size of the research project with 1-to-many interns Fast application approval Access researchers from any discipline, from STEM to social sciences Open to all industry partners, regardless of size.
- Annual figures from 2013. Last year alone we saw over $10 million in private sector investment in our research projects with over 900 industry partners We partner with over 60 academic institutions across Canada. In 2013, over 1,700 Mitacs Accelerate research projects were completed, with many more across Elevate, Globalink and Enterprise Through Globalink, we brought more than 280 of the world’s brightest students to Canada for research projects 6,300 graduate students participated in 260 professional development Step workshops
- We partner with companies of all sizes and in all industries across Canada. Currently, only industry-associated not-for-profits are able to participate in Mitacs programs. Mitacs internships are open to all disciplines, including sciences, engineering, health sciences, social sciences, humanities, business, medicine, and the arts.
- Mitacs aims to: Attract the best and brightest researchers to Canada Train students through professional development workshops and hands-on research with industry Retain talent locally in Canada, to benefit the local economy and innovation sector Deploy researchers where their talents and knowledge are most needed, to drive innovation.
- Mitacs programs and news are frequently covered in national, academic and research news outlets. Our CEO, Arvind Gupta, sat on the Jenkins Report panel – an independent review of the federal government’s support for research and development. Recommendations include more direct investment into industry to create incentives for R&D.
- Research figures cover Mitacs Accelerate, Globalink, Elevate and Enterprise programs from 2003/04 to 2012/13
- Company partner benefits include: Access the latest in research expertise and R&D knowledge that you may not have in-house Gain a competitive advantage over other companies by accessing R&D talent Tap a national research network and establish or enhance relations with local universities Maximize your R&D budget through matched Mitacs funding Develop IP through the research project Mitacs takes care of all stipend payments to the intern – they don’t become a company employee.
- Some examples of how Mitacs has helped companies: New Brunswick Pulp Mill has slashed its energy costs by $40,000 a year by implementing a new heat recovery system developed by a Mitacs intern Quebec-based robotics company enhanced camera technology on its drone aircraft A biotech firm in Toronto has developed a one-step food testing kit that saves time and money. It has now been commercialized. General Electric is developing new, energy-efficient green house lighting that improves plant growth and crop yields through research by a team of Mitacs interns And a Calgary company is commercializing new GPS technology that works indoors and underground, providing accurate location data from anywhere
- Mitacs Accelerate supports small and large scale research projects, from $15,000 up to $2 million across all industries and disciplines. Most applications to Mitacs are approved within 6 weeks.
- 1 to 5 internships: Mitacs funding is matched 1:1 Projects with six internship units or more and at least 3 interns become a cluster, where the Mitacs contribution becomes 122% of the private-sector partner’s, so the funds have better leveraging. For larger projects with multiple researchers, the interns can come from different disciplines but work on the same project.
- Funding available for 3 years with one proposal Application process: simple, easy, and quick with support from BDs Real-world exposure: interns and faculty apply the latest tools and innovations to real issues Funding provided to support the PhD student’s research Professors may recruit PhD students for the research project, even after it has been approved by Mitacs
- The “limited” category depends on the funding model for the organization. Currently, only industry-associated not-for-profits are able to participate in Mitacs programs.
- Canada’s foremost gateway to funding, expertise, facilities and global opportunities. Guides SMEs and entrepreneurs to identify and access federal and provincial government programs that support innovation. Delivered by NRC-IRAP, offers: Customized guidance from expert advisors Information on funding and support programs Quick assistance and referrals
- The Concierge Service has collaborated with federal and provincial partners, and not-for profit organizations either providing advisory services, funding, or other business innovation services and assistance. The Concierge Service does not replace the current relationships that these organizations have with their SME clients. In addition to these organizations and their programs/services, our regional Advisors have a sound knowledge of the unique business innovation resources in their local communities or business sector so that they can help connect SMEs with the most relevant ones. Partners also benefit from collaborating with the Concierge Service. They can contact our Concierge Advisors to find suitable options for their clients; They can refer SMEs to the Concierge Service website or client contact centre; or They can provide us with updates on their programs and services as required. The Concierge Service partnership model is based on mutual benefits: SMEs save time and can easily access the most appropriate business innovation resources based on their needs Partner organizations are connected with SMEs that are a good fit for their programs and services
- The Concierge Service will progressively expand its scope to include other innovation-related resources, including science and business expertise, facilities and equipment as well as resources to support SMEs’ reaching global markets.